Counties, cities see tax base changesIt’s hard enough planning a city or county budget, but when the rules change on you a month before a preliminary budget is due, things just get that much harder.
By: Lake County News Chronicle, Lake County News Chronicle
It’s hard enough planning a city or county budget, but when the rules change on you a month before a preliminary budget is due, things just get that much harder. That’s what municipal and county leaders in Lake County and the rest of the state are facing as they put together their 2012 budgets.
During the special legislative session, the Minnesota Legislature repealed the Market Value Homestead Credit program and replaced it with a new market value exclusion program.
Under the former rules, most homeowners received a credit on their property tax bills, reducing the actual tax receipts of the government body with jurisdiction. To offset the loss, cities and counties would receive reimbursements.
Over time the program was seen as state aid and put on the cutting block. Each year, St. Paul led a guessing game on just how much cities and counties would get back.
To replace the credit, a new program has been put into place. According to the Minnesota League of Cities, homeowners will receive an exclusion of a portion of the market value of their house from property taxes. The exclusion is computed in a manner similar to the current market value homestead credit. The impact of the repeal of the existing MVHC program and the new exclusion will vary from community to community, depending on a number of factors, including tax base of the community and the local tax rate.
For cities, the League said the new law should simplify the process. The city’s certified property tax levy will no longer be reduced by the allocation of the MVHC credit with a “promised” reimbursement by the state for the loss of property tax receipts.
It means the city’s tax base will be made artificially smaller but the city won’t lose any actual money. For taxpayers, it should result in no change to actual taxes paid.
Government bodies must approve a preliminary budget and a maximum tax levy by Sept. 15. The county board met Thursday to discuss it budget.